BoC Reassures Institutions on Using Liquidity Facility

The Bank of Canada has reassured Canadian financial institutions that using its Standing Liquidity Facility (SLF) is a normal part of day-to-day liquidity management, not a sign of stress.

In a joint statement with the Office of the Superintendent of Financial Institutions, the BoC said SLF advances are considered routine and should not be viewed as exceptional events or indicators of financial stress.

Deputy Governor Toni Gravelle stated that institutions can use the facility 'as needed' without fear of reprisal, emphasizing that the SLF is meant to provide fully secured intraday and overnight credit to Lynx payment system participants.

The SLF helps settle payments during the day and at the end-of-day operations by providing a buffer of funds that can otherwise be released into the market.